Why Writing a Business Plan is Critical for Success

Guest post by Darren Pearce, B. EC MBA

A business plan is critical to achieving consistent growth in any organisation. Unfortunately, most small to medium businesses don’t have a business plan. Even if they do have a business plan it usually isn’t up to date and it isn’t clearly communicated to the staff, on whose shoulders the successful execution of the business plan rests.

Business Plans are Essential for Growth

In order to go from being a small business with small profits to a larger business with larger profits you need to do the things large successful businesses do. All businesses should be sale-ready, even if the owner does not intend to sell. A sale-ready business means your investment is liquid and does not require you to be there in order to work. This kind of business is valuable asset, creating additional wealth for the owner.

Jim Rohn, one of the most famous business philosophers of our time, says, “If you want to turn your business around then don’t start a day until you’ve finished it on paper. If you want to be really successful then don’t start a week until you’ve finished on paper. If you want to be a star then don’t start your month before it’s finished on paper. If you want to retire rich and happy in record time, then don’t start your year until you’ve finished it on paper.” This is some great advice from an extraordinary businessman.

Why Writing a Business Plan is Important

It’s not so much the act of writing a business plan that is important, it’s the detailed analysis of one’s business which has the be undertaken that is the vital ingredient to success. Writing a business plan requires you to review and think clearly about the way you do business, forcing you to focus on the areas of your business that greatly need improvement and make you fix them. This reignites your passion and energy for what you’re doing. An up-to-date business plan is the passport to secure additional funding, from lenders or investors.

There are as many different opinions on how to write a business plan as there are business owners who don’t use one to control their business. Business plans differ between organisations but the principles of planning remain the same. Factors that will affect the content and style of the a typical business plan include:

· who the business plan is being prepared for

· type of business

· size of business

· reason the business plan is being prepared

· time available for writing the business plan.

Business Plan Structure

Here is a basic structure that all business plans should include:

· Cover Sheet: Including name, address, principal contact, phone no, and date the plan was written

· Table of Contents

· Executive Summary: Briefly outlining key content of the plan

· Business Overview: Including a brief description of how, when, and by whom the organisation was started. The business overview should also include the organisation’s key achievements, setbacks, current status, and a mission statement which clearly and concisely states where your business is headed and what you hope to achieve.

· Products and Services: Describing the need for the products/services in today’s marketplace, how they will make a difference, the benefits derived from using them, and detail any exclusivity or uniqueness.

· Market Description and Analysis

o Customer profile: Describing who is your target market, where they are located, and the market size.

o Industry profile: Discuss relevant trends past, present, and the future, including data on past and current sales, and future sales growth forecasts, so you can demonstrate your business is viable in the long term.

o Competitive profile: Compare and stress the advantages your business has over the competition including; price, quality, service, promotional strategies, and distribution.

· SWOT Analysis: Outline the key:

o Strengths that can be built upon

o Weaknesses that can be strengthened

o Opportunities that can be capitalised upon

o Threats that can be reduced

· Marketing Plan: Specifying the organisation goals, how they are to be achieved, and planned marketing strategies

· Operations Plan: Disclose present operational capacity and capabilities, as well as future staffing, equipment, and facility requirements. Substantiate any licensing or patent advantages the business has, and any future research and development plans.

· Financial Plan: Include financial projections with key financial performance indicators if you’re preparing the plan for financing.

· Appendix: Provide a glossary of all key pieces of documented evidence

Writing a business plan does require a considerable amount of time and effort. The long term rewards, however, well outweigh the investment of business resources. There are plenty of aids, such as business plan templates, that can assist you to accelerate business plan writing process. Remember…failing to plan is planning to fail!

About the author:

Darren Pearce, the founder of Fresh Start Initiatives, has worked in various sales, marketing and managerial roles for some of Australia’s largest corporations including Woolworths and Coca-Cola Amatil. His most recent roles were in sales and account management within the tax and legal publishing industry, handling corporate client portfolios worth several million dollars.

Since founding Fresh Start Initiatives in 2003 Darren has personally helped improve results for over 70 businesses in a variety of industries including construction, manufacturing, hospitality, retail, transport, business and professional services.

Darren holds a Bachelor of Economics Degree from Monash University, post graduate qualifications in Accountancy, and a Master of Business Administration from Macquarie University in Sydney. He also holds formal accreditation in Workplace Training and Assessment

For questions about business plans and business plan templates, you can leave a message for Darren on the Contact page.